Yes, it’s true; nobody really wants to think about a life insurance policy, since it involves thinking far ahead in the future. And of course, it involves thinking about death. Still, it’s important to know what kind of plan you need in order to be better prepared for your future and that of your family. That’s what these tips are for.
When creating a divorce settlement that requires one parent to maintain life insurance in order to keep custody of children, create the insurance policy before signing the divorce settlement. This speeds up the settlement process and insures that any kinks in the making of the insurance policy are dealt with before the custody issues.
As you get older, evaluate how your life insurance needs have changed to be sure you aren’t paying more than you should. For example, if you are retired and your children are all employed and living independently, there is no need for a zillion-dollar policy. They simply don’t need that income if something should happen to you. So if you have no dependents in the house and no debts, you should ramp down your life insurance coverage to a minimum level – say, to support only your spouse if he or she survives you.
Make sure and only by life insurance from companies that are in a strong financial position. Rating agencies like Standard & Poor’s, Moody’s and others give ratings to insurance companies. Do not work with any company that does not have an “A” rating from these agencies to protect your investments.
Be careful to not buy too much or too little insurance coverage. The general rule of thumb is to have at least 5 to 7 times your current salary as your benefit amount. Keep in mind what will have to be covered based on your families needs. Many people also make the mistake of buying too much and end up with inflated insurance premiums for coverage they don’t really need.
If you are filling out information online for life insurance, do not give out too much personal information. There are many scams that claim to offer life insurance, when in reality, they are just trying to get your information and steal your identity. Keep in mind that many quotes can be provided with just your zip code.
As you make the initial arrangements for your policy, you should pay close attention to clauses that deal with cancellation. If something happens and you need a different policy or no longer want to do business with the company, knowing about their cancellation policies will be helpful. Some companies out there will charge a form of penalty for cancelling out of the policy. Therefore, it is best to ascertain this information in advance so you know what you will be liable for if you ever cancel it.
It’s important that you understand that term life insurance is only for protection and not for investing. There is no savings component in term life insurance, so your best bet here is to simply pay for this type of insurance and invest elsewhere. Your policy payments aren’t collecting interest or anything.
No matter how many times you’ve read it somewhere, it bears repeating that knowledge is truly power when attempting to make a decision regarding your life insurance. Understand what you’re getting into, what your family needs after you’re gone and also how much of a burden the policy payments will be going forward.
Use the internet to get quotes for different life insurance policies. There are a number of websites out there that will give you a wide variety of quotes almost immediately after you enter your information. This will save you time and frustration. If you decide on one of the policies, you will have to go through an application process and a medical evaluation.
Renew your whole life insurance policy every year. Many companies automatically renew policies yearly, but you need to verify the specifics with your own insurance company. A lapse in policy coverage will drive up your insurance rates, and will not pay in the unlikely event that something should happen to you.
Check with your employer before purchasing life insurance from another source. Often various types of life insurance may be available through employee benefit packages. These policies are frequently less expensive because the employer is able to obtain a group rate for employees purchasing life insurance through this channel. These policies frequently can be expanded to include family members as well.
See, it wasn’t nearly as bad as you thought it would be; thinking about a policy in regards to your future. Life can take a lot of unexpected turns and being left without a life insurance policy can leave you unprotected. Do yourself a favor, and follow those tips to get the policy you need as soon as you can.
